Jacobs cut at Raymond James on execution risk By Investing.com

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<span>© Reuters. Jacobs (J) cut at Raymond James on execution risk</span><br />
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<p>Raymond James analysts downgraded the shares of Jacobs (J) to Market Perform from Outperform, removing its price target on the stock.</p>
<p>The analysts told investors in a note that they are downgrading the stock due to the execution risk, adding that the extended payoff outweighs the core business strength.</p>
<p>“We are reducing our rating on J to Market Perform given an increased execution risk with the Reverse Morris Trust spin of its CMS/C&amp;I segment and a longer road to create shareholder value for existing shareholders leading to a range-bound stock over the next several quarters,” the analysts explained.</p>
<p>Jacobs reported its fourth-quarter results before the open on Tuesday, posting EPS of $1.90, $0.13 worse than the analyst estimate of $2.03. Revenue for the quarter came in at $4.3 billion versus the consensus estimate of $4.21 billion.</p>
<p>The company also announced it has agreed to spin off and combine its Critical Mission Solutions and Cyber &amp; Intelligence government services businesses with Amentum to create a new publicly traded company in the government services sector.</p>
<p>The analysts stated: “The proposed transaction tax efficiently spins CMS plus C&amp;I (~$5.5B in sales and ~$440M EBITDA) and we estimate proceeds to be net ~$4.2-5.3B for Jacobs shareholders. This is in line with what many were projecting for just the CMS business alone.”</p>
<p>They added that their firm likes the separation but feels it takes too long for shareholders to get paid. “The proposed transaction tax efficiently spins CMS plus C&amp;I (~$5.5B in sales and ~$440M EBITDA), and we estimate proceeds to be net ~$4.2-5.3B for Jacobs shareholders. This is in line with what many were projecting for just the CMS business alone,” wrote the analysts. </p>
<p>“Overall, the print was mixed with topline strength offset by margin softness, a weak guide to start the year, and a host of transaction details that point to benefits in 2025,” they concluded. </p>
<p>J shares are down over 1% Wednesday after a more than 8% decline in Tuesday’s session.</p>
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